Best Improvements You Can Make for the Sake of Your Credit

Before you know it, bad marks start to weigh against your credit and that is when your financial good standing really starts to go south.

Sometimes the claims on your credit report are bogus and that can wreck your good credit too. Even if you try to do the right thing and pay your creditors off, this will generally make the situation worse. Fortunately, there are a number of steps you can take to get your credit back into shape.

Assess Your Debt

By obtaining a copy of your credit report from Equifax, Experion and Transunion, you will be able to see what kind of impact recorded debt claims on these three reports have on your overall credit score. For items that are about to fall off of your report, these items will likely not carry much weight and it may be best to just ignore them.

Much more recent items on your credit report will undoubtedly have more of an impact on your credit score and they should take priority on your list of claims to address. Anything suspicious that is being reported on your credit report that is negatively effecting your credit score should also be taken seriously. Remember, cleaning up your credit score is a game of picking your battles and dealing with the debt that matters most, not the claims that matter least.

Debt Verification and Validation

Depending on who is holding claim to the money you owe, your first matter of business is to send out debt verification or validation letters by secure mail with return receipts. This lets your creditors know you mean business and by law they have a limited time to verify or validate that you actually owe them the debt they are claiming you owe.

If they cannot produce evidence that you actually owe them the debt in question, then you can take action against these creditors by reporting them to the major three credit bureaus. If the creditors send back the proper information by secure mail that acknowledges their right to be paid for the debt in question by you, then you will want to negotiate by mail with your creditors, not by phone.

The Pay for Deletion Option

Since paying off debt you owe can lead to further negative reporting against your credit, it is generally not smart to jump to pay off a debt once a creditor has verified or validated that you owe them the debt. Instead, it is smarter to write your creditors a Pay For Deletion letter and send that by secure mail with return receipt as well.

A PFD letter gives you both the opportunity to negotiate for a lesser payout as well as requires your creditor to stop reporting negatively to your credit report. If a creditor will not take a PFD offer, then it is best to ignore them for a while and try this option again later. Remember, time is not on the creditor’s side, so as long as you do not need to raise your credit score fast, you can afford to make them sweat.

If you owe a lot of debt to a lot of different creditors, you can mention that it is unlikely that you will be able to get around to paying them off any time soon and that this may be the best you can offer for quite some time. Just make sure you are prepared to pay the amount you agree to, and do not be willing to make an offer for more than you know you will be able to pay off quickly. It is also important to introduce a clause into a PFD letter that gets the creditor to agree to not transfer any remaining unpaid debt to another third party debt-collector or collection agency to ensure the debt obligation ends with the creditor to which you are negotiating.

According to Credit Info Center, if you owe a third party collection agency a debt over $500, it is a good rule of thumb to offer to pay 25-percent of the total debt during a PFD attempt with the understanding that the collection agency likely only paid around 7-percent for the debt they are trying to collect from you.

Improving Credit for the Big Purchase

Sometimes you have to improve your credit before you can make a large purchase. This can be common when buying a home or car. Someone up to date on the latest credit rules and familiar with consumer credit rebuilding can guide you down the right path for rebuilding credit for your particular large item purchase needs and specific financial situation.

Doing nothing about your bad credit will only leave you in credit limbo for a very long time. By taking decisive action to improve your credit and clean up your credit report, you can make massive improvements to your credit score in a relatively short amount of time. It all depends on how willing you are to address the process of rebuilding your credit score and scrubbing your credit report the right way.

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